Posts Tagged ‘Renewable energy’

I know that renewables provide a useful but limited resource for our energy needs. I know that they are economic only in some specialised niches in the energy sector. I dislike the distortion in the market caused by subsidies generally and power generation subsidies in particular. I “know” because I have worked within the energy sector including the renewables sector for some 40 years. I have made the calculations myself and I don’t rely on advocacy reports or alarmist scenarios. I have made the calculations of the various benefits accruing to the developers, the equipment manufacturers, the power plant owner/operators and the consumers. Grant subsidies allow the developers to make money at the cost of the consumer. Feed-in tariffs and tax breaks allow the owner/operator to make money at the cost of the consumer. Subsidies attract the “cowboy” developers and manufacturers who take their money and arrange a suitable bankruptcy at the appropriate time. If subsidies are reduced or removed, it is all too easy for the owner/operator to walk away without losses and without liability. It is consumers and the duped small investors who pay the cost.

I pay little attention to publicity hungry “personalities” who jump on the nearest fashionable, image enhancing band-wagon. I am highly suspicious of the rich and famous supporting “causes”, without any exercise of mind and primarily for the sake of publicity and image. I admire but don’t much care for Microsoft’s autocratic ways (and I do use Windows) and see Bill Gates as extraordinary in his field but not as any kind of expert on energy matters. But he is a “personality” with a very valid claim to fame – in his area. So it is gratifying to read this report, even if it has no real impact on my views, at least as one example of a rich and famous “personality” who bothered to think.

Retired software kingpin and richest man in the world Bill Gates has given his opinion that today’s renewable-energy technologies aren’t a viable solution for reducing CO2 levels, and governments should divert their green subsidies into R&D aimed at better answers.

Gates expressed his views in an interview given to the Financial Times yesterday, saying that the cost of using current renewables such as solar panels and windfarms to produce all or most power would be “beyond astronomical”. At present very little power comes from renewables: in the UK just 5.2 per cent, the majority of which is dubiously-green biofuel burning1 rather than renewable ‘leccy – and even so, energy bills have surged and will surge further as a result.

In Bill Gates’ view, the answer is for governments to divert the massive sums of money which are currently funnelled to renewables owners to R&D instead. This would offer a chance of developing low-carbon technologies which actually can keep the lights on in the real world.

“The only way you can get to the very positive scenario is by great innovation,” he told the pink ‘un. “Innovation really does bend the curve.”

Gates says he’ll personally put his money where his mouth is. He’s apparently invested $1bn of his own cash in low-carbon energy R&D already, and “over the next five years, there’s a good chance that will double,” he said.

The ex-software overlord stated that the Guardian‘s scheme of everyone refusing to invest in oil and gas companies would have “little impact”. He also poured scorn on another notion oft-touted as a way of making renewable energy more feasible, that of using batteries to store intermittent supplies from solar or wind.

“There’s no battery technology that’s even close to allowing us to take all of our energy from renewables,” he said, pointing out – as we’ve noted on these pages before – that it’s necessary “to deal not only with the 24-hour cycle but also with long periods of time where it’s cloudy and you don’t have sun or you don’t have wind.” ……

I would go further of course. A low-carbon economy itself is nothing to aspire to unless it makes commercial sense. It does not now and will not for many years to come. It achieves nothing for climate but does increase costs, everywhere and particularly in the developing world where fossil fuels are needed most. In Europe, the obsession with renewables has delayed the financial recovery and has cost almost 20 million jobs.

Though Bill Gates does not qualify as an energy expert, he certainly does qualify as an influential investor. He even qualifies as an informed investor in the energy sector. So some little common sense from one of the very rich and famous to balance the irrational, do-gooding and sanctimonious mouthings of others is always welcome.

The ridiculous energy policies in Germany in subsidising renewable energy and shutting down nuclear plants is backfiring. Green Energy policy in Europe has been at the cost of about 15 million jobs in lost growth opportunities.

They left themselves no option but to return to coal.

It is only a matter of time before the intransigent “green” lobbies of Europe are forced to face realities and cut back the wasteful subsidies on renewable energy and allow the fracking of shale for gas and to return to nuclear power. It has been a costly 3 decades of “green” madness.

In the wake of Fukushima, Angela Merkel said Germany would phase out nuclear power by 2022 and subsidize renewable energy. Average German consumers can’t afford the ‘green’ subsidies as they drive up energy prices and suck profits from energy companies.

In the next 27 years, Germany will spend 550 billion euro on renewable technologies like wind and solar, in the hope of attaining 80 percent renewable energy by 2050.

“It’s being sold on the message it’s either wind energy or radioactive catastrophe, this plays on fear, and makes money for wind energy providers,” Petra Dahms, anti-wind power activist, told RT.

According to the Cologne Institute for Economic Research, Germany’s energy costs are 40 percent higher than in neighboring France and the Netherlands. ……

Steag GmbH started Germany’s first new power plant fueled by hard coal in eight years, allowing the generator and energy trader to take advantage of near record-low coal prices that have widened profit margins.

The 725-megawatt Walsum-10 plant, located near Dortmund in the western part of the country, began electricity output today, the Essen-based company said in an e-mailed statement. It will probably start commercial operations later in the year after “optimization works and testing,” it said.

The plant is the first new hard-coal-fired generator in Europe’s biggest power market since 2005. It marks the start of Germany’s biggest new-build program for hard coal stations since its liberalization in 1998. Ten new hard-coal power stations, or 7,985 megawatts, are scheduled to start producing electricity in the next two years, according to information from German grid regulator Bundesnetzagentur and operators.

“Coal prices recently fell to their lowest price for over four years in October and carbon prices are half what they were two years ago, making coal-burn extremely attractive to generators in terms of profitability,” Gary Hornby, energy markets analyst at Inenco Group Ltd., said by e-mail today.

The price for coal used in thermal plants for delivery to Amsterdam, Rotterdam or Antwerp next year, dropped to a record low of $80.25 a metric ton on Oct. 14, according to broker data compiled by Bloomberg. The contract traded at $81.60 at 2:51 p.m. London time, broker data show.

Electricity and the price of its generation is now one of the most fundamental parameters which steers the economy and industry and ultimately the level of unemployment in any country. It ought not to be subject to the misguided whims and fancies of “feel-good” environmentalism, but for the last 2 decades much of Europe has been travelling down a cul-de-sac chasing a mirage. Instead of just focusing on generating electricity at the lowest possible cost while keeping the air and water sufficiently clean, politicians have been lured down the renewable energy path in a fantasy of saving the world from the imaginary dragon of carbon dioxide emissions. Instead of just using wind and solar energy in the special niches they are suited to, they have been subsidised and promoted as basic generation which is a role they cannot fulfill.

The US with its much lower electricity prices now has a significant competitive advantage over Europe and will come out of the recession much faster as it creates jobs.

Europe has bet big on wind and solar energy, and many environmental advocates would like America to follow. Wind and solar have a role in the U.S. energy economy, but we would be wise to see the cautionary tale in the European experience and adjust our plans accordingly.

Wind and solar generate 3.5% of America’s electricity today, but Denmark gets 30% of its electricity from wind and hopes to produce 50% by 2020. Germany, Europe’s largest national economy, produces roughly 12% of its electricity from wind and solar today, and it wants renewable energy to account for 35% of electricity generation by 2020.

Clean energy powered by renewable resources is understandably attractive. But the honeymoon with renewables is ending for some Europeans as the practical challenges of the relationship become clear.

The first challenge is cost. Germany has reportedly invested more than $250 billion in renewable energy deployment, and its households pay the highest power costs in Europe—except for the Danish. On average, Germans and Danes pay roughly 300% more for residential electricity than Americans do.

But it is not just price that is at issue. The reliability of electricity supply is not helped by the inherent instabilities of having too much dependence on intermittent and unforeseeable sources.

Another challenge of Europe’s growing dependence on renewable energy is far more serious: the potential loss of reliable electrical supply. It’s one thing to ask consumers to pay more for cleaner energy; it’s another to force them to endure blackouts. …..

……. Grid operators generally rely on coal and nuclear plants to meet baseload demand while modifying gas and hydroelectric power output to meet shifting demand. But electricity from wind and solar is variable and intermittent. Nature determines when and how much power will be generated from available capacity, so it is not necessarily “dispatchable” when needed.

When intermittent renewables are small players in the grid, they can be easily absorbed. But as they reach European levels of penetration, the strain begins to show. There are increasing reports of management challenges resulting from wind and solar across the European grid, including frequency fluctuations, voltage support issues, and inadvertent power flows. Anxious operators are concerned about potential blackouts.

In an April 17, 2012, letter to EU Commissioner for Energy Gunter Oettinger, for example, Daniel Dobbeni, the European Network of Transmission System Operators president, said grid operators are “deeply concerned about the difference in speed between the connection of very large capacities of renewable energy resources and the realization in due time of the grid investments needed to support the massive increase of power flows these new resources bring.” He also expressed great concern “about the potential destabilizing effect of outdated connection conditions for distributed generation that are not being retrofitted anywhere fast enough.”

The article continues with a warning to the US about unhealthy subsidies.

There is also an important lesson in the European experience with energy subsidies: Focus incentives so they reward the right behavior. Lavish subsidies for wind and solar have changed Europe’s generation mix, but the costs have been high because the subsidy structure prioritized mass deployment rather than efficiency, reliability and innovation. Even in the U.S., the wind-production tax credit has occasionally produced “negative pricing”—that is, turbine operators pay grid operators to take their power even though it isn’t needed, just so the wind generators can collect tax credits.

Chasing “green” fantasies about renewable energy are proving to be among the most profligate of all the misguided policies which build on alarmist scenarios. Renewable energy has its place but it is the “green” belief that it could replace fossil fuels which has proven to be nonsense. And what is worse is that the pursuit of “low carbon” energy serves no purpose whatsoever. It is just waste which has cost Europe many millions of jobs and has unnecessarily prolonged the recession. Perhaps as many as 15 million jobs in Europe have been “lost” based on the growth that has been suppressed by high energy prices.

Financial Times: RWE npower became the first of the big six power suppliers publicly to warn that the government’s green policies will cost consumers more, saying energy bills would rise by more than 19 per cent by the end of the decade.

A household’s energy bill will rise from £1,247 today to £1,487 by 2020 in real terms – not taking into account inflationary increases – if usage remains static, npower warns in a report. Costs caused by government policies such as subsidies for new wind farms and energy efficiency schemes will be the main driver, adding £144, it claims.

…. The report finds that the costs of upgrading Britain’s ageing gas and electricity networks would be the next biggest driver of bills, adding £114, while the costs of the nationwide roll-out of “smart meters” that send automatic meter readings back to suppliers will add £24.

Profits will account for £71, or just under 5pc, of the bill by 2020, up £12 from today, but a significant jump from £18 in 2007.

There is a place for solar and wind and tidal and wave energy. But intermittent and unpredictable sources as these all are cannot be used to satisfy our base load demands. If used – when available – to augment our conventional sources (mainly fossil fuels, hydro and nuclear power) they can play a very useful role – eventually – in reducing the cost of producing power. But this presupposes that they are competitive with conventional production. And they can be in specific situations and especially in remote locations or where grid power is limited.

But subsidies have rarely enabled new technologies to become commercially viable. They tend to isolate and preserve the developers of the new technology from commercial pressures and are usually counter-productive. By loading conventional fossil fuel sources with short-sighted and useless taxes and by providing hefty subsidies for building solar and wind power the electricity market has been distorted to a destructive and unsustainable extent. Two articles recently address the utter failure of the subsidy regime.

State subsidies to clean energy producers have already fallen by between 12 and 40 percent on average in recent years, industry analysts say.

They could fall by another 10-20 percent in a new energy sector reform expected mid-July, according to the Spanish media. ….

In the middle of the last decade when the economy was enjoying strong growth, Spain put a cap on the price of green energies and provided “fairly generous” subsidies, said Carlos Garcia Suarez, expert in the sector at the IE Business School. …..

In many parts of northern Europe, wind and solar projects may be highly visible facts on the ground. But the headline economic fact behind renewable energy is, and always has been, its sheer and blatant “unsustainability”.

Energy insiders have long known that the notion of ‘renewable energy’ is a romantic proposition – and an economic bust. But it is amazing what the lure of guaranteed ‘few strings attached’ government subsidies can achieve. Even the Big Oil companies bought into the renewables revolution, albeit mostly for PR reasons. Like Shell, however, many quickly abandoned their fledgling renewable arms. Post-2008, they knew, the subsidy regimes could not last. Neither was the public buying into the new PR message.

Now it was just a question of time before Europe’s world leading pioneers of solar and wind power, Germany and the UK, decided they had had enough of the self-inflicted economic pain. And all the signs are – as Germany’s solar sector just went belly up and the UK is made aware of how much every wind job actually costs – that the slow implosion of the renewables revolution is under way.

The plain fact is that installing solar panels, especially in the northern hemisphere, makes about as much economic sense as Iran heading up a UN Human Rights Commission (which it has done by the way). Equally, the viability of windfarms has always been the renewables industry’s worst kept secret.

And yet, aided by aggressive and heavily-funded green lobbies, leftist social engineers, appalling journalism, naive politicians and unscrupulous opportunistic renewable energy entrepreneurs, wind turbines and the photovoltaic industry quickly became established facts on the ground, giving the appearance of economic ‘viability’. Why else would government back them using our cash? ……

… In Europe, Germany was a major green pioneer, especially regarding solar energy. The UK, being the windiest country in Europe, focused on wind power. In both countries, however – to mix metaphors – the wheels are fast coming off.

In June, the sun finally set on Germany’s solar sector with power companies, large and small, seeing their £21 billion investment in solar energy disappear into the ether. As one German commentator wryly observed: “the sun does send an invoice after all”.

By mid-June the German company Siemens announced it was winding down its solar division with a view to shutting down completely by next spring. Siemens had entered the solar thermal systems market when it bought the Israeli company Solel, believing market growth would be rapid. The gamble failed. Siemens lost around €1 billion.

In March, Bosch signalled its withdrawal from the solar cell and solar module market. Bosch board chairman Franz Fehrenbach, who had been behind the company’s push into solar energy since 2008 has further admitted that the German solar sector generally is “doomed to die”. Bosch will lose even more than Siemens, probably around €2.4 billion.

But it is the private investors who bore the full brunt of the loss as the former hot shots of the stock exchange, Germany’s SolarWorld and Q-Cells, among other solar companies, lost tens of billions in capital investment.

Meanwhile, in the UK, wind power is again making the headlines, but for all the wrong reasons. A new analysis of government and industry figures revealed that every UK wind industry job is effectively subsidized to the tune of £100,000 per year. In some cases it rises to £1.3 million per job. In Scotland, with its 230 onshore windfarms, the figure is £154,000 per job. Even if the highly optimistic maximum projection of 75,000 wind industry jobs by 2020 is realised the figure would only drop to £80,000.

But, as the Renewable Energy Foundation, a UK think-tank, has pointed out, to meet its EU obligation of providing 15 percent of its generated energy from renewable sources by 2020 – a ridiculously untenable goal – the lavish subsidies will need to rise still further to £6 billion per year. Neither do the figures take into account the cost to the country of an exodus of energy-intensive industries; a very real threat if green levies on energy bills continue to rise. European industry and power stations have already turned to burning millions of imported tonnes of American wood pellets in a desperate bid to keep costs down. And that, as has been reported, is to the detriment of fine forests in the US and a resultant impact on CO2 levels. ….

Two interesting articles today and perhaps they presage the return of some sanity to the ludicrous, Canute-like attempts to try and control climate. The first is in Die Welt (which is usually a most politically correct adherent of global warming dogma) about the nonsense that the Greens have wrought in German policy (by Sebastian Lüning and Fritz Vahrenholt reported by P. Gosselin). The second is a leader in the Telegraph calling for the repeal of the Climate Change Act in the UK.

NoTricksZone: Germany’s Energiewende [energy transition over to renewables] is being watched closely in foreign countries. Already bets are being made on whether the expensive experiment is going to work. Meanwhile increasing numbers of international experts are expressing serious doubts. In the March 20th print edition of German national daily Die Welt, Daniel Wetzel reports on a survey by the World Energy Council in an article titled “The Energiewende is an international flop”. An online versionof the report is now available and bears the watered down title: “Other countries disdaining the Energiewende”:

Worldwide doubt about the success of the German Energiewende is growing. International experts are sure that the German economy is weakening. This is the finding of a survey from the World Energy Council. […] A rapid short-term shutdown of nuclear power plants along with unlimited subsidies for renewable energies: In Germany this has been viewed as the silver bullet for energy policy since the Fukushima accident. However in Europe and globally, there’s hardly a nation that views the German ‘Energiewende”’ as worth copying. These are the findings of the German section of the World Energy Council in 23 member countries, made exclusively available to Die Welt. […] The rising doubt is possibly related to the unexpectedly rapidly rising electricity prices in Germany, which are having a dissuasive effect. Stotz believes: ‘Obviously one has to be able to afford an energy transition.’ (Read more at Welt Online).

In a commentary appearing at Die Welt titled, “Germany, the odd one out”, Daniel Wetzel pleads for more prudence, and rejects climate alarmism as the most important argument for an Energiewende:

Also the necessity to rapidly end the use of fossil fuels no longer appears as urgent as it was just a few years ago. Indeed, in the meantime, fear of climate change appears to have evaporated worldwide. Global warming has been taking a break for over 10 years, and politicians in many countries appear as if they would rather await a good explanation for this phenomenon before again making the fight against climate change a high priority. Quite apart from this: one other large industrial country has just succeeded in reducing its per capita CO2 emissions to levels of the early 1960s. The best in the class when it comes to climate politics is the USA. Thanks to fracking technology in natural gas drilling, they have been able to switch off dirty coal power plants.”

“The Tory part of the Coalition is beginning to recognise some painful truths, but it is time for the Coalition to tear up its energy policy before the lights go out” says The Telegraph:

…… Because of a misguided faith in green energy, we have left ourselves far too dependent on foreign gas supplies, largely provided by Russian and Middle Eastern producers. Only 45 per cent of our gas consumption comes from domestic sources. All it takes is a spell of bad weather, and the closure of a gas pipeline from Belgium, to leave us dangerously exposed, and to send gas prices soaring. Talk of rationing may be exaggerated, but our energy policy is failing to deal with Britain’s fundamental incapacity to produce our own power.

…… It is time for the Coalition to tear up its energy policy before the lights really do go out. The first priority must be to repeal the Climate Change Act of 2008, with its brutal, punishing targets: ……… But green technology – in its current incarnation, anyway – is just too inefficient and expensive to meet our energy needs. In some of the worst weather for more than 30 years, green power still only provides a tiny fraction of our energy needs. Solar power is of limited use in our cold, dark, northern climate. And wind power isn’t much better – cold weather doesn’t necessarily mean windy weather.

…….. He will know that American gas prices have plummeted, thanks to the US embracing the shale gas revolution. ………. Our energy problems have been deepened by the greener-than-green Liberal Democrats, with their seeming stranglehold on the Cabinet post of Energy Secretary. ………….

There is some good news, however. As we report today, government sources have said that wind power subsidies are to be cut again. This is a move in the right direction and we very much welcome it. It is to be hoped that there will be more such announcements, and concrete actions, from a government that has neglected a fundamental duty – to keep the lights on, energy affordable and our houses warm.

While going through security checks at a number of airports this week, I got to wondering whether once a “commercial” solution to a “problem” has been “found” there is a tendency to keep the problem alive long after it is no longer a problem – just to keep the sales of a commercial solution alive. I was then sitting through a presentation by a start-up company in the carbon sequestration business and was struck by the fact the entire marketing strategy is built on building up a fear of carbon emissions and the strategy collapses if this false premise is abandoned. The questions then started piling up:

Airport Security – Is the vested interests of the security industry (manufacturers of scanning machines, security manpower companies etc.) such that the perceptions of security risks will never be allowed to diminish?

Computer security – Is there a vested interest of the virus protection software suppliers to ensure that perceptions of risks are never allowed to diminish? and does it extend as far as – directly or indirectly – helping the production of damaging viruses?

Renewable energy: All the billions spent in subsidising the development and deployment of wind and solar power are in the pursuit of a solution to a problem that does not exist but where the vested interest is too strong to allow the perception of the problem to diminish or disappear.

Carbon sequestration: As with renewable energy subsidies, the billions milked from tax money for the development of carbon sequestration systems now creates a vested interest in first denying that carbon sequestration is uselss for its stated objective and second that reduction of carbon dioxide emissions is irrelevant to trying to control climate (if at all such control is possible).

Influensa vaccines. The benefits of vaccination against flu are dubious but the vested interest of the sellers of the vaccines in maintaining the fear of flu every winter are obvious.

I feel sure there must be many cases where solution providers work to keep the problem alive and well.